Supermarket dumping of cage eggs could result in egg shortages

Egg producers have continued to express concerns about the impact on Australia’s egg industry of moves by supermarket giants Coles and Woolworths, and fast food chain McDonald’s Australia, to ditch cage eggs.

Australian egg farmer and Chair of the NSW Farmers’ Association Egg Committee Bede Burke told Australian Food News that the 2014 announcement from Woolworths in particular that it would phase out cage eggs completely could lead to an egg shortage in Australia.

Moves away from cage eggs

Australian Food News reported in September 2014 that McDonald’s Australia had announced it would move to cage-free eggs by the end of 2017. Also in September 2014 Australian Food News reported that Woolworths had announced that its ACT stores would sell 100 per cent cage-free eggs as part of the the supermarket’s ongoing commitment to remove cage eggs from all outlets by December 2018.

Woolworths announced its 2018 commitment to phase out cage eggs in conjunction with its partnership with Jamie Oliver in 2013. The supermarket group was the first Australian retailer to introduce free-range eggs to its own brand. Woolworths has said it will also remove caged eggs as ingredients from all of its Homebrand products by the end of 2018.

Australian Food News reported in March 2013 that Woolworths’ rival Coles had also announced that it would move towards cage-free eggs.

According to figures collected by the Australian Egg Corporation Limited (AECL), grocery sales of eggs in Australia were valued at $785.6 million in the year to June 2014. While the barn-laid segment has remained relatively stable, the free range egg segment in Australia has seen considerable growth in recent years, and the cage egg segment has shrunk. In the year to June 2014, the AECL reported that cage eggs held 53 per cent volume share and 41 per cent value share, down from 65 per cent volume share and 50 per cent value share in December 2010; while free range eggs represented 38 per cent volume and 47 per cent value share in the year to June 2014, up from 26 per cent volume share and 38 per cent value share in December 2010.

Much of the push for free range eggs has been justified by retailers and animal rights groups as a move for better animal welfare outcomes for laying hens. However this claim has received some criticism from industry bodies, including the AECL, which said it “believes all egg production systems have their own advantages and disadvantages in relation to hen welfare”.

Australian Egg Industry concerns

The growth of the ‘free range’ segment at the expense of cage eggs has also brought increased concerns from some of Australia’s egg producers.

Australian egg farmer and Chair of the NSW Farmers’ Association Egg Committee Bede Burke told Australian Food News that the announcement from Woolworths that it would phase out cage eggs completely seemed to be a case of “me too and one-upmanship” from the supermarket group and that the decision would have an impact on producers’ reinvestment decisions.

Mr Burke told Australian Food News that while Coles had reduced the presence of cage eggs in its supermarkets, and Woolworths said it will remove them completely, German-owned grocery retailer ALDI said that its cage-egg category is growing, and that the different approaches could be “enormously confusing” for an investor in the Australian egg industry.

“I think the long-term ramifications of this are to have a really big gap in terms of our egg supply in ensuing years,” Mr Burke told Australian Food News. “I can’t define what that will be, but I can certainly tell you that there are people holding back from re-investing as a result of our major retailers’ actions, our pricing outcomes and our regulatory authorities, and it’s having a big impact,” he said.

Mr Burke said he urged the major grocery retailers to reconsider the impact of their decisions about what type of eggs to stock, and suggested that Woolworths’ decision to dump cage eggs altogether was a “bad decision”.

“In business sometimes, no matter who we are, whether in the journalism trade, the farming trade, or the retailing trade, we make bad decisions,” Mr Burke said. “If I make a bad decision in my business in agriculture, whether it’s cropping or livestock or in my poultry, I review that and I try and change that decision and implement something that’s a better decision,” he said.

“And if there was a recommendation that I could make to our major retailers, and in particular Woolworths’ decision to totally walk away from the caged egg industry, it would be to recommend to them to please review the decision, please have a look at what the flaws may have been in that,” Mr Burke said.

In November 2014, Australian Food News reported that an announcement from South Melbourne Market that it would ban the sale of all caged eggs by introducing a “We Care about the Chicken and the Egg” campaign, was also met with criticism from farmers and industry commentators.

‘Free range’ label troubles

As well as an increase in market size, in 2014, the definition of ‘free range’ eggs also received much attention from the Australian Competition and Consumer Commission (ACCC) and the NSW Government’s Department of Fair Trading.

In December 2014, Australian Food News reported that the ACCC had continued its focus on ‘free range’ egg claims, and instituted proceedings in the Federal Court against R.L Adams Pty Ltd, which trades as Darling Downs Fresh Eggs, alleging that it made false or misleading representations that its eggs were free range, in contravention of the Australian Consumer Law. This followed similar action instituted by the ACCC earlier in December against Derodi Pty Ltd and Holland Farms Pty Ltd, and a decision in September 2014 by the Federal Court to hand down a $300,000 penalty against Pirovic after finding, by consent, that its ‘free range’ egg representations were false or misleading.

Australian Food News reported in June 2014 that concerns about the definition of ‘free range’ had also led to the NSW Government’s Department of Fair Trading starting development of a draft National Information Standard on free range eggs and with regard to the current review of the Model Code. The NSW Department of Fair Trading says it is examining the workings of the Model Code to improve effectiveness and enforceability and to “work to enhance consumer confidence and certainty around egg labelling”.